Northwestern Journal of Technology and Intellectual Property Volume 6 Article 7 Issue 2 Spring Spring 2008 Massively Multiplayer Online Fraud: Why the Introduction of Real World Law in a Virtual Context Is Good for Everyone Ethan E. White Recommended Citation Ethan E. White, Massively Multiplayer Online Fraud: Why the Introduction of Real World Law in a Virtual Context Is Good for Everyone, 6 Nw. J. Tech. & Intell. Prop. 228 (2008). https://scholarlycommons.law.northwestern.edu/njtip/vol6/iss2/7 This Article is brought to you for free and open access by Northwestern Pritzker School of Law Scholarly Commons. It has been accepted for inclusion in Northwestern Journal of Technology and Intellectual Property by an authorized editor of Northwestern Pritzker School of Law Scholarly Commons. NORTHWESTERN JOURNAL OF TECHNOLOGY AND INTELLECTUAL PROPERTY Massively Multiplayer Online Fraud: Why the Introduction of Real World Law in a Virtual Context Is Good for Everyone Ethan E. White Spring 2008 VOL. 6, NO. 2 © 2008 by Northwestern University School of Law Northwestern Journal of Technology and Intellectual Property Copyright 2008 by Northwestern University School of Law Volume 6, Number 2 (Spring 2008) Northwestern Journal of Technology and Intellectual Property Massively Multiplayer Online Fraud: Why the Introduction of Real World Law in a Virtual Context Is Good for Everyone By Ethan E. White* I. INTRODUCTION ¶1 A simple investment plan barely requires explanation. The concept is embedded in our common sense. For example, a person spends his or her own time working at a job. As a result of the time spent, the person earns income. In order to make this income grow, the person may choose to “make the money work” through some form of return generating investment, most commonly a bank account. The end goal of the investment is to both earn a return (in this example, interest) and the eventual refund of the principal investment. But what if the expected return is not received? Or more dramatically, what if the principal disappears and therefore cannot be refunded? Because of just such a scenario, deposits in the United States banking system are now federally protected as a proximate result of the many bank failures preceding the Great Depression.1 ¶2 An investor may seek returns outside of the federally protected banking system, however, and may turn to an unprotected citizen bank. In this conception, it is an individual person (or uninsured group of individuals) that is acting as the lender instead of a federally recognized and protected bank. If the citizen banker were to abscond with the investor’s principal, the investor could likely turn to the courts for enforcement, seeking, among other possibilities, a civil cause of action in fraud.2 At a minimum, the investor would be able to obtain at least some part of the principal investment. ¶3 However, the above investment scenario is centered in the real world where (in the United States at least) income for principal is earned and returns are paid in dollars. What if the income earned were not in dollars, but in gold pieces, or ISK?3 In that case, you are not in the real world at all, but in a persistent online world popularly known as a Massively Multiplayer Online Game (MMOG). And while playing one of these MMOGs, you may find yourself in the misty town of Menethil Harbor4 with another player offering to hold your principal gold in exchange for a daily return based on that citizen bank’s investment choices. Much like a real world investment choice, the offer * Northwestern University School of Law, Candidate for J.D., 2008. 1 FDIC: Who is the FDIC?, http://www.fdic.gov/about/learn/symbol/index.html (last visited Nov. 5, 2006) (“[T]he FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.”). 2 See infra Part V for a more complete discussion of fraud and the potential differences that might exist across state jurisdictions. 3 Gold is a common currency in many online games, and ISK is the currency of the game EVE Online. 4 A central harbor in Blizzard’s World of Warcraft. See World of Warcraft: World Map, http://www.worldofwarcraft.com/info/flashmap/ (last visited Feb. 10, 2008). 228 Vol. 6:2] Ethan E. White may seem like a fantastic way to make your gold “work for you” because the in-game currency can often be exchanged for real-world dollars. But, much like the unscrupulous real world citizen bank, this character may disappear and take your hard-earned gold (and by association, dollars) with him. ¶4 In the real world, the duped investor can usually turn to the courts to recover the principal and punish the offender; can a MMOG player seek a similar right? The basic answer is no, according to the gaming companies, the “gods” of these persistent worlds. For the most part, the companies have taken one of two approaches. The first, a hard-line approach, refuses to recognize any player's right to in-game property and maintains all property rights are held by the company itself.5 This approach thus seems to deny a cause of action. If an in-game fraud is alleged, the approach typically dictates that the game company deletes the offending accounts for violating the company’s terms of use. The other approach is less drastic but still gives the player no real recourse. Under this approach, the company looks the other way, leaving the players themselves to work things out under the broad rubric of the end-user licensing agreement (EULA), the standard legal document governing participation in online worlds. Even if a fraud is alleged, the company will do nothing. This approach is demonstrated by CCP Games' reaction to a massive fraud perpetrated in their MMOG, EVE Online,6 where a CCP Games executive stated that “[t]he behavior of [the perpetrator] and his [scheme] is despicable, but allowed. As long as he kept all of his work within the boundaries of the EULA, there's nothing [EVE Online creator] CCP Games will do to touch him.”7 ¶5 This article argues that MMOG players should not be left without legal recourse for the simple fact that the real world result cannot be reconciled with the persistent world result. In both instances, real time and money are at stake. Therefore, when money disappears through a fraudulent investment scheme, in both instances, the victim should be able to turn to the courts for remedy. ¶6 The analysis of fraud claims in a MMOG context proceeds in six parts. Part II provides a brief discussion of the history, evolution, and business stakes for a MMOG as context for later discussion. Part III demonstrates that while currency lost may be purely in-game, it has real world value. If it has value, though, the gaming companies have maintained that the user has no right to this value. Part IV will show that numerous theories are developing to show that some form of property rights for in-game possessions is likely recognizable. Part V uses a real investment scheme from a popular MMOG to demonstrate the likelihood of a scheme occurring, and Part VI explores how the facts from this case study might fit into a common law fraud cause of action as well as possible federal criminal penalties. Lastly, Part VII argues that by allowing a cause of action, gaming companies will actually create a more efficient and profitable business model than exists in their current in-game property rights regime. 5 EVE Online End User License Agreement, http://www.eve-online.com/pnp/eula.asp (last visited Nov. 10, 2006). 6 See infra notes 20–23. 7 Caroline McCarthy, Cons in the Virtual Gaming World, C/NET NEWS.COM, Aug. 31, 2006, http://news.com.com/Cons+in+the+virtual+gaming+world/2100-1043_3-6111089.html?tag=st.num. 229 NORTHWESTERN JOURNAL OF TECHNOLOGY AND INTELLECTUAL PROPERTY [2008 II. MASSIVELY MULTIPLAYER ONLINE GAMING BASICS ¶7 Massively multiplayer online games have evolved from the combination of primarily two gaming genres: pen-and-paper role-playing games and networked multi- user dungeons (MUDs).8 From their pen-and-paper roots, MMOGs borrow diverse variations on role-playing principles and canons from such games as Dungeons and Dragons (including such Tolkien-esque characters as dragons and dwarves).9 From their MUD heritage, MMOGs have developed a persistent world that exists independent of the player.10 Unlike many video games, the environment does not cease to exist when the player turns off the power; instead, these virtual worlds keep moving, much like the real world.11 The end result is an on-going world filled with as much adventure and opportunity for success (however defined by the player) as one has time for. For the gaming business, this has also translated into big business for some industry players.12 Most major games charge some form of subscription fee, typically around $15 per month.13 With player bases for popular MMOGs estimated in six to seven figures,14 it is not hard to see that the market (and profit) for MMOGs is substantial. ¶8 Each of these virtual worlds has some form of economy and often more than one form. Possibly the most common type of economy is that of non-player character (NPC) merchants.15 In a simple transaction, a player interacts with the programmatic merchant (thus a non-player) to exchange some in-game currency or item for something the NPC owns.